Causes for a slowdown could be attributed to any combination of the following:
1. Telco orders are lumpy. CSCC had a big April-June96 quarter in which I presume they sold a lot of switches to (Bell companies in particular). Q3/Q4 business could have been, primarily cards to populate those switches, and some new business etc. (i.e. swithces to existing/new customers) If this theory is true, (and if typical) then managment did a horrible job of containing expectations after Q296. Moreover, if the theory is true then the build out should continue in earnest once customer's have sold existing capacity. (This is likely an industry phenomena)
2. IMO, there is a transition from FR to ATM going on in the industry. Business at the IMUX companies would tend to confirm the trend. However, I am not convinced this is the cause of any "slowdown" at CSCC. Their products should compete favorably in each market.
I am increasingly troubled by management tactics. Dan Smith gave some impressive throughput figures on the post earnings conf. call. However, last week on CSCC's ISP conf call, (they discussed IP Nav./AX) I asked Fred S. (IP Nav. Director) about performance and got no answer. I understood him to say they would "check into it" and get back to me. I am still waiting. Further, when I called my local CSCC rep and left a message, my call was not returned. Recent emailings to various people at the company have either not been returned, or failed to answer questions. Things like this would make a cynic think they are hiding something. I however, assume they are busy making deals.
In large part though, it is this "no comment" and lack of guidance position that is killing the stock. (The Fortune article did not help) The companies marketing dept. seems, for whatever reason, to be unable to wage an effective hype campaign. As a result, I am occasionally compelled to do it for them.
CSCC should be fine. Expectations are so low that IMO, they only need to come close $.21-.23 this quarter to avoid another disaster. (and do a better spin job on the call) What I could glean from their web page leads me to believe the issues facing the company are not about technology.
Cheers,
Daniel |
